Chris Forte’s “A Few Thoughts to Start the Day” – Market Turmoil and Wisdom of the Crowd

Posted on May 9, 2022 by Scott Shuda

May 9: A few thoughts to start the day. . . Remember the famous scene from the movie Animal House when Bluto, played by John Belushi, gives an impassioned speech to rally his sulking frat mates? “Was it over when the Germans bombed Pearl Harbor?” That’s how writing “Thoughts” sometimes feels. Luckily for the disreputable Delta Tau Chi fraternity they did rally and they went on to party like it’s…1978. Hopefully the bulls will return soon to terrorize the Neidermeyer and Dean Wormer’s of the bear camp. Food fight! On that note, Avi Gilburt of fame said this weekend, “I believe we will be bottoming soon, and starting our next bullish phase to 5500SPX. “Everywhere I look, I see bearish articles…television tells me that we are in a bear market for all the various reasons most cite – Russia/Ukraine war, inflation, the Fed… growth slowing, earnings…the stock market is down, labor shortages, food shortages, energy crisis, China lockdown…nuclear war, and I could probably come up with more if I tried. Talk about a wall of worry…Yes, the fear in the market and the expectation of a continued bear market is now ubiquitous. And, it is almost as ubiquitous as it was in March of 2020.” “It seems quite clear that bearishness seems to be approaching some form of climax. In fact, we have been presented by another “Markets In Turmoil” by CNBC this past week. And, as Charlie Bilello pointed out, the upside in the market is significantly greater than any further downside when these special presentations make an appearance on CNBC. “You see, we are all driven by our base emotions as subconsciously directed by our limbic system. And, the goal as an investor is to know when to act contrary to those “feelings.” “I believe we are finally approaching the completion of a 5-wave decline to complete an a-b-c correction. And, as long as we hold the 4000SPX region of support, I am looking for an impulsive reversal through the 4310SPX region to signal that the bulls have returned to the market. “…the potential upside in the market is significantly greater than any reasonable potential downside at this time. And, the extreme ubiquitous negativity in sentiment is indicative that a correction is nearing its completion, with the uptrend towards 5500SPX (our next high probability target) likely beginning once we confirm a bottom in place.” Just when you thought Breakout Investors couldn’t get any better along comes “Wisdom of the Crowd.” Based on surveys filled out by Breakout Investors the first two “Wisdoms” (SMSI and DMIFF) are on the Feed and they are fascinating. Scott Shuda reads between the lines and provides color to the survey results. For instance, “Last week’s Wisdom of the Crowd survey for DMIFF reveals a curious, but I guess not surprising, fact — DMIFF is a favorite of the community’s thought leaders, “the Breakout Investors” — this is shown by the Watchlist feature, where DMIFF is currently at the top of the leaderboard, right there with SMSI having 9 total rankings and an “Overweight” designation.” Speaking of diamond miner DMIFF, Florian Buschek has a good article on the Feed, “Jewelry Sales Remain Buoyant in April,” which says, “US jewelry sales rose in April amid consumer excitement to return to in-store shopping.” Mastercard reported revenue for the category climbed 33% year on year during the month. Seeking Alpha says Wall St. Analysts Rating for VLRS went from Buy to Strong Buy Mike Santoli: “IPO index, ARK, SPAC index, Cloud stocks are all 45 – 60% down from their highs. That’s where the biggest excesses were. They’ve all been drained away, but who knows if entirely. Big question is what does it mean for the broader market?” “Fat, drunk, and stupid is no way to go through life, son.” – DEAN WORMER, ANIMAL HOUSE

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